Is Wall Street Buying Up All of America's Homes?
If you are thinking about buying a house, you might be interested in the latest real estate news so you can stay on top of everything that could influence your decision. If that is the case, you have probably heard of investors and wondered what impact they are having on the housing market right now. As a result, you may find yourself wondering:
- How many homes do investors own?
- Are institutional investors, like large Wall Street Firms, really buying up so many homes that the average person can’t find one?
To answer those questions, here’s the real story of what’s happening based on the data.
Let us begin by determining the number of single-family homes (SFHs) and the proportion of those that are rentals owned by investors. According to SFR Investor, which studies the single-family rental market in the United States, there are eighty-two million single-family homes in this country. But how many of them are actually rentals?
According to data shared in a recent post, sixty-eight million (82.93%) of those homes are owner-occupied – meaning the person who owns the home lives in it. If you subtract that sixty-eight million from the total number of single-family homes (82 million), that leaves just about fourteen million homes left that are single-family rentals (SFRs).
Do institutional investors own all of those remaining fourteen million homes? Not even close. Let’s take it one step further. There are four categories of investors:
- The mom & pop investor who owns between 1-9 SFRs
- The regional investor who owns between 10-99 SFRs
- Smaller national investor who owns between 100-999 SFRs
- The institutional investor who owns over 1,000 SFRs
These categories show that not all investors are large institutional investors. To help convey that even more clearly, here are the percentages of rental homes owned by each type of investor (see chart below):
As shown in the chart, despite what the news and social media would have you believe, the vast majority are not owned by large institutional investors. Instead, most are owned by small mom & pop investors, like your friends and neighbors.
What is actually happening is that there are people out there, just like you, who believe in homeownership and see purchasing a home (or a second home) as an investment. Maybe they saw an opportunity to buy a second home over the last few years to use it as a rental and generate additional income. Or maybe they just decided to keep their first house rather than sell it when they moved up.
So, when it comes to institutional investors, do not believe everything you read or hear. They aren’t buying up all the homes, making it impossible for the average person to buy. That’s just not what the numbers show. Institutional investors are actually the smallest piece of the pie chart.
While institutional investors are active in the single-family rental market, they are not buying up all of the available properties. If you have any additional questions about what you are hearing about the housing market, let us get in touch so you can get the answers you need.